Canaccord Analyst: Google Still Innovative but Losing Luster of a Startup

Canaccord tech analyst Colin Gillis attended the Search Engine Strategies Conference in San Jose last week as well as meeting with key Google (GOOG) executives at the company’s Mountain View, Ca. campus. While he came away with mostly positives, he also had a few concerns about the behemoth’s “struggles to retain the feel of a startup.”

In a note to clients, Mr. Gillis said:

Google continues to drive innovation in areas include: facial imaging search, a new version of iGoogle that levers side-tabs; its OpenSocial platform that allows gadgets to communicate with one another; and the virtual product Lively.” He also noted that Google gained market share in July – up 40 basis points compared to June to take 61.9% of the search engine market – and that coverage of ads may increase “in certain transactional searches.

However, Mr. Gillis said that anecdotal evidence from conversations with developers gives him some concerns that Google is having trouble retaining its feeling of a start up company. As well, there is concern from Search Engine Marketing companies that August is tracking mildly weaker than July.

Historically, August is flat to modestly above the trends seen in the month of July.